The recently appointed secretary of Treasury Janet Yellen called for a meeting on the subject of stablecoins. She told the media last Friday that an interagency coordination and communication event is to take place to deal with the stablecoin projects. The President’s Working Group for Financial Markets plans to conduct the meeting at the Comptroller of the Currency office.
The representation from the Federal Deposit Insurance Corporation is also expected to join and share their stance related to stablecoins. It should be noted that stablecoin is a class of virtual assets that resembles traditional paperback. The value of these stablecoins is usually tied with fiat reserves like the US dollar.
Jerome Powell is the chairperson of the US Federal Reserve. In a congressional hearing, he acknowledged that stablecoin projects are increasing. He also issued warnings about not having enough regulatory backup and legislature to manage them effectively.
Powell is not alone among the government officials who garner reservations about the increasing stablecoins variants. A few weeks ago, Elizabeth Warren compelled SEC chairperson Gary Gensler to take action against the financial threats that are inflicting the cryptocurrency investors. Stablecoins are paving the way for large sums of USD-lateral currencies to bypass the country that also provides a bypass for illegal activities.
CBDC can Eliminate the Need for Stablecoins
At present, several stablecoins are pegged to the US dollar. In the last few months, the values of these stablecoins have been increased. Tether, among the most well-known stablecoins, has faced persecution from government officials for not providing sufficient support. The Federal Reserve has been considering the launch of a state-backed stablecoin, also known as CBDC. According to Powell, CBDC will eliminate the need for decentralized stablecoins. However, he also admitted that the Federal Reserve experts are not very confident in this matter, and any type of CBDC might not be launched at all.